'Fruit money' is not a fundamental right of elderly residents, a court ruled, as it dismissed a challenge to the requirement that old-age allowance recipients live continuously in Hong Kong for the year before they apply.

Finding against Lam Wo-lun, a 74-year-old retired permanent resident who had sought a judicial review of the rule, Mr Justice Johnson Lam Man-hon said the allowance was not intended to be a publicly funded pension, and that the scheme might not be sustainable without a requirement that applicants, who must hold permanent residency, spend no more than 56 days outside the city in the year before they first apply.

The judgment in the Court of First Instance came despite a 2010 ruling that a similar limit for dole recipients was unconstitutional and unlawful.

Lam said fruit money was different from Comprehensive Social Security Assistance, and the government had the right to take into account 'public order' when setting out rules for applicants. In this case, he took 'public order' to mean maintaining the stability of the scheme.

Unlike CSSA recipients, people aged 70 or over are not means-tested when applying for the allowance. Older people in desperate need should apply for CSSA, he said.

The monthly old-age allowance of HK$1,090 is offered to permanent residents aged over 65, but is subject to a means test until the age of 70. Successful applicants can continue receiving fruit money as long as they spend at least 60 days a year in the city.

Noting that fruit money once granted was less likely to be withdrawn, Lam said: 'In this respect, there is a much greater need to have a requirement of continuous residence ... to safeguard the sustainability of [the old age allowance] as compared with CSSA.'

He said there was a perception that the allowance was a fundamental right of elderly people, but that did not accord with its original intent, which was to help 'elderly people to have some financial independence from their family members'.

In the government's submission to the court, it estimated it would incur expenses of HK$279 million per year if it scrapped the residency requirement. That would be the equivalent of 21,000 more eligible recipients.

Lam's two applications for fruit money were turned down, in March 2008 and April 2010, because of the residency rule. Having fulfilled the residency requirement, he reapplied in October 2010 and succeeded.

The Society for Community Organisation, which supported Lam and was listed as an interested party in the judicial review, said it regretted the ruling and would consider an appeal.

Group member Richard Tsoi Yiu-cheong said outside court: 'The old-age allowance is a basic right for the people of Hong Kong.'

Secretary for Labour Matthew Cheung Kin-chung said the ruling reaffirmed the legal basis of the residency requirement, and it would continue to apply.

Barrister Albert Luk Wai-hung, who is not involved in the case, said an appeal might be worthwhile as a higher court may offer more clarity on some elements of the ruling. He said he understood why the judge made his ruling, based on the different natures of the two schemes, but would leave the applicant to decide what points to argue in an appeal.

Social Welfare Department figures show that 154,176 people receive CSSA for the elderly in March this year, compared to 153,005 in June 2010, when the residency rule was removed. Over 521,000 people received fruit money in March.